India’s economy will do well with extra fiscal stimulus and there will be no harm if New Delhi busts its fiscal deficit target to create space for higher capital spending, a top government policy adviser said on Wednesday.
The comments from Rajiv Kumar, deputy head of policy think-tank Niti Aayog, comes at a time when Prime Minister Narendra Modi’s administration is deliberating on measures to revive an economy, which recorded its slowest growth in three years in June quarter.
Government officials last week told Reuters that they were contemplating spending up to Rs 500 billion ($7.61 billion) more to halt the slowdown, which could widen the federal fiscal deficit for the financial year ending next March to 3.7% of GDP from a budgeted target of 3.2%.